David Cameron to defend right of parents to give their children money in wake of tax row

David Cameron will launch a robust defence of the right of parents to give money to their children after Labour said it will review inheritance tax rules.

In an unprecedented Commons appearance, the Prime Minister will reject suggestions that he has avoided tax after he disclosed that he had personally profited from his stake in an offshore investment fund.

Mr Cameron will tell Parliament that allegations about his father Ian are “hurtful and untrue” as he seeks to get back on the front foot after a week which saw calls for his resignation.

Explained: Ian Cameron's ties to Mossack Fonseca

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The Prime Minister will use the appearance to announce a series of new measures to tackle corruption, including a new criminal offence for corporations who fail to stop their staff facilitating tax evasion.

He will “utterly refute” claims from his opponents that he has been able to “avoid” paying up to £80,000 in inheritance tax after his mother gave him £200,000 following the death of his father, sources said. John McDonnell, Labour’s shadow chancellor, on Sunday said that following the disclosures about the gift given to Mr Cameron by his mother, the party will review inheritance tax rules, potentially meaning that tens of thousands of middle-earners would be hit by the levy.

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But Mr Cameron will launch a defence of parents who hope to give their children lump sums without being hit by tax. A source said the Prime Minister believes it is "completely standard, normal behaviour" for parents to wish to leave tax-free sums to their children.

Ahead of last year’s general election, the Prime Minister announced plans to raise the threshold at which people pay inheritance tax on properties to £1 million, meaning that around 20,000 fewer middle-class families will have to pay.

The fallout following Mr Cameron’s disclosures about his own personal wealth continued on Sunday, with suggestions from members of the Government that all ministers and MPs could now be forced to publish their tax returns.

George Osborne, the Chancellor, who is coming under intense pressure to reveal details of his own finances, on Sunday indicated that he could follow Mr Cameron’s example, with a source saying that he “is always happy to consider ways to ‎offer even more transparency”.

The Prime Minister faced criticism on Sunday after it emerged that he would be able to legitimately avoid paying inheritance tax on the £200,000 if his 82-year-old mother Mary lives for another two years.

He was left £300,000 following the death of his father in 2011 - less than the IHT threshold. He received the money form his mother months later.

In an apparent attempt to make political capital out of the issue Jeremy Corbyn, the Labour leader, on Sunday suggested that there is a case for looking again at inheritance tax rules.

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Mr McDonnell that “nothing is off the agenda” in Labour review of tax policy, suggesting that the party could increase the inheritance tax burden.

Asked if there was “anything wrong” with the financial gift given to Mr Cameron by his mother, Mr Corbyn said: “That is within the rules, providing of course the person giving the money lives for more than seven years and obviously we hope she does. The issue is one that it does actually reduce the level of inheritance tax that is available for the Exchequer as a whole. Is there a case for looking at inheritance tax rules? Possibly.”

Paul Johnson, the director of the Institute for Fiscal Studies, the respected financial think-tank, last night said that inheritance tax should be overhauled amid fears that it unfairly hits middle-earners.

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Senior Conservative MPs also called for the tax to be scrapped altogether.

Dominic Raab, a Conservative minister said that Mr Corbyn was “whipping up a mob mentality” by attacking the Prime Minister over his finances.

Mr Cameron will use his Commons appearance to say that for the first time, companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion.

“This Government has done more than any other to take action against corruption in all its forms, but we will go further,” Mr Cameron will say.

In an article for this newspaper David Gauke, the Financial Secretary to the Treasury, writes that the Government will “legislate for over ‎25 further measures in this Parliament to tackle avoidance, evasion, offshore evasion and aggressive tax planning, raising a further £16 billion”.

And he discloses that HMRC is currently investigating thousands of leads relating to offshore companies, including 700 with a link to Panama.

Mr Gauke also said that media organisations including the BBC and the Guardian associated with the leak of files from law firm Mossack Fonseca – dubbed the Panama Papers – are refusing to hand over the data to the Government so that officials can mount an investigation.

There was a growing clamour last night for all MPs to publish details of their finances.

Labour and the SNP called for all politicians to disclose information about their taxes following the row over Mr Cameron’s finances.

Penny Mordant, the defence minister, said that if the public wanted more information about MPs’ tax affairs then it would “have to happen”.

Amber Rudd, the Energy Secretary, said that the idea was “worth looking into”.

Downing Street sources said that the Prime Minister will use his Commons statement to “offer his most robust defence against Labour attacks on his financial affairs”.

Asked how the Prime Minister will respond to claims his family attempted to avoid inheritance tax, the source said: “Hundreds of thousands of families…give money to children. This is completely standard, normal behaviour. There is no hint of tax avoidance.”

Mr Cameron is still facing questions about whether any of the £200,000 gifted to him by his mother could have come from assets related to the offshore fund his late father was involved in.